The beginning of 2026 did not bring the calm usually expected in the global stainless steel industry chain ahead of the traditional Lunar New Year offseason. Instead, under the double pincer attack of surging raw material costs and escalating trade protectionism, the market is undergoing a violent restructuring.

According to SMM data, the most-traded SS contract surged and strengthened this week. As of 10:30 a.m. on May 16, the SS2507 contract was quoted at 12,995 yuan/mt, up 285 yuan/mt WoW. From a macro perspective, on May 12, significant breakthroughs were achieved in the economic and trade talks between China and the US held in Geneva: both sides reached an agreement to substantially reduce the originally planned 125% "reciprocal tariff" to 10% and suspend the imposition of a 24% tariff for 90 days. This move significantly alleviated the negative impact of trade frictions on stainless steel exports and effectively boosted market confidence. Meanwhile, the US CPI data released also caused a stir in the market. The data showed that the US CPI YoY growth rate was far below market expectations, hitting a new low since 2021. This outcome strengthened expectations for US Fed interest rate cuts, injecting a shot in the arm for the commodity market. Amidst the combined impact of these two positive factors, stainless steel futures prices rebounded rapidly in the short term, and market sentiment significantly warmed up. At the fundamental level, driven by strong favourable macro factors, the stainless steel spot market saw a significant price strengthening this week. The cautious wait-and-see sentiment that had pervaded the market earlier was effectively alleviated, and industry confidence gradually recovered, leading to a noticeable rebound in trading activity within the week. Meanwhile, stainless steel social inventory also showed a downward trend. However, as the impact of the macro-positive factors gradually faded by Friday and the phased procurement demand was met, market transactions weakened again, and prices showed signs of loosening. Overall, despite the macro-policy tailwinds driving increased trading activity and price hikes in the stainless steel market this week, there has been no substantive turnaround in the industry's fundamentals. On the supply side, stainless steel enterprises maintained a high-production trend, with market supply remaining loose. On the cost side, prices of high-grade NPI and high-carbon ferrochrome continued to decline, weakening cost support. On the demand side, as the traditional peak consumption season draws to a close, downstream phased demand, after being concentratedly released, lacks subsequent growth momentum, and demand sustainability faces challenges. Coupled with the gradual fading of the macro-positive effects, constrained by multiple factors, stainless steel prices lack strong support for upward movement, with upward momentum significantly insufficient in the short term.

Imports: SMM statistics showed that China's stainless steel imports in March 2025 stood at 135,500 mt, down 18% MoM and 16.1% YoY. Among them, imports from Indonesia (excluding scrap) totaled 100,700 mt, down 18.05% YoY and 25.82% MoM. By product form, the structure of stainless steel reflow from Indonesia in March showed differentiation: hot-rolled volume increased 14.61% MoM to 17,200 mt, while cold-rolled volume plummeted 28.06% MoM to 74,900 mt, and semi-manufactured products dropped 49.62% MoM to just 8,200 mt. Despite March being the traditional peak consumption season of "Golden March and Silver April," domestic downstream end-use demand did not significantly recover, coupled with a substantial increase in local stainless steel production, leading to a noticeable contraction in imports. Exports: Data showed that China's total stainless steel exports in March 2025 surged to 520,500 mt, up 54.24% MoM, returning to a high level above 500,000 mt, and up 13.41% YoY. By product structure, the share of coil exports significantly increased to 65.99%, while the share of products and other categories dropped to 9.58%. All sub-categories achieved substantial growth, with coils, narrow strips, profiles, and pipes up 77.62%, 66.02%, 72.35%, and 41.74% MoM, respectively. By export destination, Taiwan, China, Turkey, and Vietnam became the main contributors to the increase, with exports to Taiwan up 20,400 mt (152.36% MoM), to Vietnam up 28,500 mt (97.42% MoM), and to Turkey up 18,600 mt (225.26% MoM), making the overall export data impressive. After the Chinese New Year, the peak consumption season of "Golden March and Silver April" began, leading to a concentrated release of pent-up procurement demand. Meanwhile, domestic stainless steel production in March reached 3.4 million mt, with ample supply supporting export growth. Additionally, rising prices of raw materials such as high-grade NPI and high-carbon ferrochrome pushed up stainless steel costs, and the market sentiment of "rush to buy amid continuous price rise and hold back amid price downturn" was strong, further stimulating transactions. However, entering April, US President Trump proposed a significant increase in tariffs on China, posing a major impact on the export-oriented stainless steel industry, spreading market pessimism and causing prices to pull back. Although there are currently re-export trade routes and the actual impact of tariff policies has not fully materialized, the export outlook has been clouded by uncertainty.

The Ministry of Finance of India announced on April 21, 2025, the imposition of a 12% provisional safeguard duty on imports of non-alloy/alloy flat steel products (HS codes 7208, 7209, etc.), effective for 200 days. A minimum CIF price of $675-964/mt was set, with imports exceeding this limit exempt from the duty. The measures took effect immediately...

SMM reported on April 6 that in 2024, U.S. imports of stainless steel from China accounted for 5.8% of its exports. The increase in U.S. tariffs impacted exports, and considering the current situation from various perspectives, the industry may face a price decline.

As the end-of-quarter disturbances gradually subsided and the central bank's operations supported liquidity, the market's funding conditions recently showed a stable and slightly loose trend. Industry insiders indicated that the liquidity pressure after the quarter-end has significantly eased, and the price center of funds is expected to decline. Meanwhile, fiscal efforts will accelerate the pace of government bond issuance, and the supply pressure of government bonds in Q2 is gradually becoming apparent. It is widely expected in the industry that if the accelerated supply of government bonds pushes up funding rates, the central bank may use various monetary policy operations to hedge the pressure on funding conditions. Coupled with the fiscal injection effect in Q2, the funding conditions are expected to marginally loosen.